Category Archives: Vehicle depreciation

The IRS has released the inflation-adjusted limitations on depreciation deductions for business use passenger automobiles, light trucks, and vans first placed in service during calendar year 2015. The IRS also modified the 2014 limitations to reflect passage of the Tax Increase Prevention Act of 2014 late last year.

At the end of 2014, Congress extended bonus depreciation to the 2014 tax year in the case of passenger vehicles. Congress has not, however, done the same for passenger vehicles placed in service during 2015. This means that although several of the 2015 limits have been adjusted upward for inflation, the total amount a taxpayer may deduct for a vehicle placed in service during 2015 will be effectively $8,000 lower than for a vehicle placed in service during 2014, unless Congress again provides retroactive relief this year.

Depreciation limits

The Internal Revenue Code imposes dollar limitations on the depreciation deduction for the year the taxpayer places the vehicle in service in its business, and for each succeeding year. The IRS adjusts for inflation the amounts allowable for depreciation deductions.

Passenger automobiles

The maximum depreciation limits for passenger automobiles first placed in service during the 2015 calendar year are:

$3,160 for the first tax year;

$5,100 for the second tax year;

$3,050 for the third tax year; and

$1,875 for each succeeding tax year.

Trucks and vans

The maximum depreciation limits under for trucks and vans first placed in service during the 2015 calendar year are:

$3,460 for the first tax year;

$5,600 for the second tax year;

$3,350 for the third tax year; and

$1,975 for each succeeding tax year.

Sport Utility Vehicles (SUVs) and pickup trucks with a gross vehicle weight rating (GVWR) in excess of 6,000 pounds continue to be exempt from the luxury vehicle depreciation caps based on a loophole in the operative definition.

Michael W. Blitstein, CPA is a partner with the firm of CJBS, LLC, in Northbrook, Illinois. Michael advises his clients on tax, business and retirement planning, developing short and long-term strategic plans designed to achieve success for business owners and their businesses.